6 Things You Need to Know About Mental Capacity And Your Future

Enduring Power of Attorney and Personal Directive

Today, you have the freedom to decide where to live, how to invest your money, how you spend your time, and how you manage your health. You get to enjoy this liberty because you have the mental capacity to handle it, to make decisions. Mental capacity can affect your future.

The average life expectancy for Canadians in 2020 is 85 years and continues to rise each year [Source]. A long life is great, but there’s more to decision-making than a beating heart and breath in your lungs. By law, you must be mentally capable of making important decisions.

Mental incapacity is a real possibility for all of us. Unfortunately, it’s largely out of our control. Dementia and other illnesses or a serious accident can cause us to lose our mental capacity. Fortunately, there are tools you can use to prepare for mental incapacity in your future.

The Importance of Mental Capacity & Your Future

Once you’ve lost the mental capacity to make important decisions, it’s too late to put legal protections in place to guarantee your wishes are fulfilled. That’s why you must prepare for the possibility of mental incapacity now.

1. What is mental incapacity?

“Mental capacity is the ability to understand and appreciate the consequences of your decisions. In general, it refers to your ability to understand the information that is relevant to a particular decision and to appreciate what could happen as a result of making or not making a certain decision [Source].”

Your mental capacity can fluctuate and be impacted by various factors such as:

  • Stress, anxiety, and grief;
  • A medical condition and/or medication use;
  • Tiredness;
  • Blood sugar levels;
  • Blood pressure; and/or,
  • Alcohol or drug use.

On some days or during certain times in the day, you might be more or less capable of decision-making. For typical day-to-day decisions like what to eat for breakfast, your fluctuating mental capacity is probably fine. But for bigger decisions like how to manage your finances, you need a high level of mental capacity.

2. Why Does Mental Capacity Matter?

By law, if you’re declared mentally incapable, you no longer have the freedom to initiate and create legal documents (like a will, power of attorney, or personal directive) to protect you or your estate. You are also prohibited from entering into legal agreements, partnerships, or informal trusteeships. While this may seem prohibitive, it’s actually for your protection.

If you do not have the mental capacity to handle important decisions about your life (finances, health, etc.), you must rely on others to make those decisions for you. When your decision-making becomes the responsibility of other people, it can be a stressful time (for you and for them).

3. How Does the Law Help in Cases of Mental Incapacity?

There are legal protections in place for cases of mental incapacity. Legally, you’re either mentally capable or you’re not. If your mental capacity is in question, the law requires a Declaration of Mental Incapacity which must be signed and supported by doctors, psychologists, and/or a judge. This document is required to enforce legal protections like an Enduring Power of Attorney and a Personal Directive.

The law separates your decision-making into 2 categories:

  1. Financial decisions, and
  2. Personal decisions.

When preparing for mental incapacity, you must address both categories individually.

Financial Decisions

Financial decisions are about things like money, investments, real estate, and personal property. An Enduring Power of Attorney is a legal tool relating to mental incapacity and financial decisions.

Personal Decisions

Personal decisions are about everything other than financial matters, including:

  • Who you associate with;
  • Who you live with;
  • What activities you participate in;
  • Your education;
  • Your employment;
  • Your health care; and,
  • Where you live.

There are many other aspects of your life that would fall under the “Personal Decisions” category.

4. What is an Enduring Power of Attorney?

A Power of Attorney is a legal document appointing someone you trust (called an “attorney”, though it does not have to be a lawyer) to handle your financial decisions. An Enduring Power of Attorney allows your appointed person to handle your finances specifically if you become mentally incapable.

When you have an Enduring Power of Attorney in place, you can be confident that, in the event of mental incapacity, your interests and financial affairs will be protected. Without an Enduring Power of Attorney in place, the process of authorizing a loved one to handle your financial matters is costly, lengthy, and complex.

Under an Enduring Power of Attorney, your appointed person is authorized to:

  • Sign your cheques
  • Sign documents on your behalf
  • Manage your investments
  • Sell your property
  • Apply for financial benefits (such as Old Age Security pension)

5. What is a Personal Directive?

A personal directive is a legal document appointing someone (called an “agent”) you trust to make personal decisions for you when you are mentally incapable. It can also detail your own instructions for matters that are important to you, such as:

  • Medical treatment you do or don’t want (including end-of-life);
  • Living arrangements;
  • Activities you do or don’t want to participate in;
  • Temporary care arrangements for your children; and
  • Other personal and legal matters.

When you have a Personal Directive in place, you can rest assured that your best interests and preferences will be adhered to should you become mentally incapable of handling personal decisions. Without a Personal Directive, your loved ones would likely have to undergo a lengthy and costly process to apply for an Order under the Dependent Adults Act to appoint a guardian to make personal decisions on your behalf.

6. Who Should You Appoint?

Both an Enduring Power of Attorney and a Personal Directive grant a broad range of power over your financial and personal affairs to the people you appoint. Choose your attorney(s) and agent(s) carefully. They must be people you trust.

You can appoint more than one person for both documents and they must be at least 18 years old (in Alberta).

Here are some things you should consider when choosing who to appoint:

  • The responsibility of handling your financial and personal decisions is a lot of work. Be sure the person you want to appoint is willing and able to handle it.
  • They should know you well enough to understand and interpret your instructions but you should also discuss your wishes with them before mental incapacity becomes an issue.
  • Your needs and your privacy are important and must be protected. Appoint people who are respectful of you and can be trusted to take care of you.

Planning for Your Future Care

When you have an Enduring Power of Attorney and a Personal Directive in place, you help your loved ones by easing stress and tension during a difficult time. You also enjoy peace of mind about your future regardless of your mental capacity.

Remember that you must have mental capacity to prepare these documents. Don’t wait till it’s too late.

These documents transfer your decision-making power to other people so you want to be certain they are clear and legal. At the very least, have a lawyer review your documents to ensure they’ll be upheld and followed when necessary. However, it is advisable to have a lawyer draw up the documents for you.

The Estate Planning lawyers at Osuji & Smith Lawyers have your best interests in mind. We can review or prepare your Enduring Power of Attorney and Personal Directive.

To discuss mental capacity and your future, contact Osuji & Smith Lawyers today